As Some Reverse Layoffs, Others Plan to Bank Cash with 'Funding Cliff' Looming

As governors gear up to apply for federal money from the $10 million Education Jobs Fund, states and school districts are wrestling with how they plan to spend the aid the Obama administration said was desperately needed to save what the administration said would be some 160,000 educators’ jobs that otherwise would be lost.

Some districts will use the money to roll back furloughs and restore jobs slated to be cut for the 2010-11 school year. Others already had factored the money in while making budget decisions that allowed them to forgo layoffs.

And in other places, districts are planning to spend the lion’s share of the money in the 2011-12 school year, because they are concerned about the forthcoming “funding cliff” after funds from the American Recovery and Reinvestment Act, the federal economic-stimulus program, dry up at the end of this year.

U.S. House Speaker Nancy Pelosi, D-Calif., brought members of Congress back from their August recess to vote for the jobs measure that top Democrats, including President Barack Obama, said was urgently needed to help keep tens of thousands of teachers from being laid off.

The measure also provides $16 billion in Medicaid funding to states. That has an indirect benefit for schools, because states would likely have had to make additional cuts—including to education—if the money for Medicaid had not been forthcoming. The legislation was approved by the House of Representatives in an emergency session and signed into law by President Obama Aug. 10.

Governors have to move quickly. States have until Sept. 9 to apply for a share of the $10 billion Education Jobs Fund, and the U.S. Department of Education plans to release the money to states within two weeks of their application.

With the exception of Texas—which, because of state-level political wrangling would have to submit its own unique application—states may choose whether to distribute the money using their own education formulas or via the Title I formula for disadvantaged students. (The Texas application would use the Title I formula only.) School districts have until September 2012 to spend any money not used in the 2010-11 school year.

The Education Department’s guidance gives latitude to districts on how they can spend the money, while making clear that it must go toward nonadministrative education jobs including teaching, counseling, and maintenance, as long as they belong to district employees. If districts don’t need the money to recall laid-off teachers or other employees, or save others from losing their jobs, they may use it, for example, to pay salaries and benefits for teachers to provide after-school or extended-day learning.

Mixed Responses

Already, some districts are preparing to rehire staff members who had received pink slips. For instance, the 225,000-student Broward County, Fla., district, which opened schools this week has recalled 344 of 555 dismissed teachers.

In Georgia, where $332 million is expected to flow to the state’s coffers, districts are being reminded to bear in mind that the outlook for next fiscal year will be uncertain, said Bert Brantley, the director of communications for Gov. Sonny Perdue, a Republican. There’s no one-for-one replacement for the $140 million Georgia is spending in fiscal 2011 from the stimulus-program’s State Fiscal Stabilization Fund.

“The danger is spending one-time funds and not recognizing the difficulties it would cause in 2012. We are trying to be perfectly clear to everyone about the challenges that will still be faced,” Mr. Brantley said.

The new school year has already started in most Georgia districts, and state officials are not discouraging administrators from hiring back teachers in places where they are especially needed, but rather encouraging them to keep an eye on the future, Mr. Brantley said.

“All of our systems know that very well, and we know they will be cognizant of that as they receive these funds,” he said. “They will do the right thing. They see their property-tax collections have nose-dived.”

The 48,000-student Atlanta school system plans to use the funds to help support its Effective Teacher in Every Classroom initiative, said district spokesman Keith Bromery.

“It would potentially support teacher recruitment and retention and professional development, which is in keeping with the purpose of the funding to directly support teaching and learning in the classroom while stimulating the economy,” he said in an e-mail.

The picture is less clear for the 678,000-student Los Angeles Unified School District. Officials hope to use the funding to help make up for a deficit in the 2011-12 budget that is estimated at more than $200 million, said district spokeswoman Lydia Ramos. But the fiscal outlook for California remains uncertain. Some legislators, including state Sen. Darrell Steinberg, a Democrat, have proposed using the $1.2 billion coming to the state from the jobs fund to help offset the state’s deficit.

The federal guidelines appear to prevent such a fate, telling states they are not allowed “to reduce or retire debt obligations incurred” by the state. But similar concerns were raised before, when states’ own education spending went down in several instances after a $100 billion infusion from the economic-stimulus law. ("Education's Share Falling in Some State Budgets", Feb. 10, 2010.)

South Dakota will accept all the $47.2 million in federal aid it was allocated in the jobs bill, Gov. Mike Rounds said last week, after guidance from the Education Department convinced the Republican governor that the state can qualify for the federal money without requiring any tax increase. He had been concerned that accepting the $26.3 million education aid portion might trigger an increase in local school districts’ property taxes.

Maintenance of Effort

For some states, regulations attached to the Education Jobs Fund may prevent them from applying.

South Carolina likely can’t take advantage of the more than $143 million designated for it because the state does not meet the minimum higher education finance requirements, said Jim Foster, a spokesman for the state education department.

When states applied for the fiscal-stabilization money under the economic-stimulus law, they had to meet what is known as a “maintenance of effort” requirement that showed cumulative education spending had not been drastically lowered in the state over the course of years. The measure in the Education Jobs Fund guidelines, hoever, requires states to meet that standard separately for K-12 and postsecondary education.

“The impression we are getting is that our reading of the situation is correct and we don’t qualify based on the language in the bill now,” Mr. Foster said.

U.S. House Majority Whip James E. Clyburn, D-S.C., has been working with the federal and state education departments in hopes of finding a solution.

Palmetto State school districts could certainly use the money, Mr. Foster said. Between 2,800 and 3,900 teaching jobs have been cutin the past two years, and projections show an estimated 2,000 to 3,000 more classroom jobs could be on the chopping block in the 2011-12 school year.

Chris Boswell, the chief of staff for Wyoming Gov. David D. Freudenthal, said state officials there believe at this point the state may be eligible to apply for the funding. The governor has not yet decided whether to apply, a decision that will be made after examining the requirements, Mr. Boswell said.

Wyoming’s districts, which remain fully funded, are in a better position than many in the country.There have been no budget-related layoffs, Mr. Boswell said. “We are in a fortunate situation,” he said.

Concerns Raised

Not everyone is pleased with the congressional action, however.

Rep. John Kline of Minnesota, the top Republican on the House Education and Labor Committee, noted that Congress had already approved $100 billion last year for education programs under the economic-stimulus law, with the intention of providing temporary relief to states.

“It was a one-time investment, we were told—they would not be back for more,” he said in the floor debate earlier this month on the jobs legislation. “Yet here we stand. They are back for more.”

Rep. Kline said that the bill does nothing to overhaul teacher-layoff practices, which critics say tend to prize seniority over other factors, such as teacher effectiveness. Some education organizations, including the Education Trust, in Washington, which advocates for poor and minority children, had encouraged Congress to include language in the bill requiring districts to abandon such practices as a condition for receiving the funds.

“Earlier this year, Education Secretary Arne Duncan told us, ‘Today, the status quo clearly isn’t good enough.’ The status quo is exactly what this $10 billion will perpetuate,” Rep. Kline said. “Schools will continue to operate on ‘last hired, first fired’ policies that ignore student achievement when deciding which teachers to keep in the classroom.”

And some Democrats who supported the underlying legislation expressed misgivings about the budget offsets made to find money for the fund, including a $12 billion cut to the food stamp program.

“At a time when we have seen the demand for food assistance skyrocket, we have chosen to pilfer $12 billion from the food stamp program,” Rep. Rosa DeLauro, D-Conn., said during the debate. “When so many families are struggling, … cutting food assistance is unconscionable. The bill before us today shamefully pits these priorities against each other.”

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